European Union: Digital Single Market Update - European Commission Releases Proposal For Updated Audiovisual Media Services Directive Along With Four Other Announcements

Last Updated: 4 July 2016
Article by Dylan Kerrigan and Ingrid Silver

Since the European Commission announced its much vaunted Digital Single Market strategy in May 2015 to boost the EU's digital economy, it has had precious little to show, with major initiatives such as copyright reform and e-privacy stuck in debates over how best to achieve meaningful reform.

The signs are that things are about to change, especially if events of 25 May 2016 are anything to go by.  On that date the Commission unveiled a major plan to boost e-commerce alongside a proposed update of EU regulation to create a "modern and fair legal environment" for all providers of audiovisual services.  It also announced draft regulations dealing with geo-blocking in e-commerce (but which will not apply to audiovisual services), price transparency of parcel delivery services, and cooperation between national consumer protection authorities.

Completing the May 2016 package is a communication from the Commission on online platforms and the Digital Single Market, signalling that it will adopt a copyright package in autumn 2016 aimed at achieving a fairer allocation of value generated by the online distribution of copyright-protected content by online platforms.

For now, the most relevant aspect of the 25 May 2016 announcements for media companies is the much-anticipated Proposal to amend the existing Audiovisual Media Services Directive, which provides a common framework for the regulation of certain audiovisual media services across the EU, and is the focus of this update. 

The current Audiovisual Media Services Directive (Directive)

The current version of the Directive came into force on 20 May 2010.  One of the principal aims of the Directive was to ensure that linear (i.e. scheduled, one-to-many) and on-demand services are subject to a comparable degree of regulation, albeit with a lighter touch regime for on-demand services.  The degree to which the regulatory approach should differ is a debatable area in itself, particularly in view of the significant increase in on-demand services since the current Directive came into force.

More particularly, the Directive includes important provisions in areas such as product placement and the protection of minors.  It also contains the important country of origin principle whereby audiovisual media services transmitted by a provider under the jurisdiction of a particular Member State only have to comply with the laws applicable to their services in that Member State (even if they transmit into others).

The Proposal

The latest Proposal follows the Commission's public consultation process launched on 6 July 2015, which asked how well the current framework works, what roles and responsibilities market players should have, and how best regulators can protect viewers, promote European works and regulate advertising in the audiovisual online world.  It is also a central plank of its Digital Single Market strategy, which is designed to boost the EU's digital economy through better targeted regulation.

Convergence between traditional broadcast media and internet-based services (including video-on-demand and video-sharing platforms) means regulators must increasingly balance rules to ensure they remain relevant to the media landscape and how the public consumes information and entertainment.  The differing and changing nature of audiovisual media services also means the Commission has stated it is not adopting a "one-size-fits-all" approach here, but instead intends to make rules to be flexible to allow for this. 

The Proposal therefore seeks to achieve a number of outcomes.

  • Change to what constitutes a 'programme' to remove the requirement that their form and content be comparable to the form and content of television broadcasting.1 The list of examples of what constitutes a programme also now adds videos of short duration.  This appears designed to capture short video content not typically shown on television broadcasts, but which are increasingly popular with audiences of on-demand services.  The change could mean that services which only curate short videos, like YouTube star channels or video journalism, are now caught by the Directive.  In the UK, this could mean they are required to notify Ofcom before their service begins, and to advise Ofcom if the service closes or undergoes significant changes.  It will be interesting to see how broad a role Ofcom is to play in regulating these services in future.
  • More flexibility for advertising rules by allowing TV broadcasters to spread the overall limit of 20 per cent ad time between 7am and 11pm (spread across the day as they choose), instead of the more rigid 12 minutes per hour.  The new rules also allow shorter ad break frequency than is presently the case by allowing ad breaks in films made for television, cinematographic works and news programmes once every 20 minutes (rather than the existing 30 minutes).  The longer ad break frequency for children's programmes and ban on ads in religious services are to remain.  The Proposal also clarifies product placement and sponsorship by making product placement admissible in all audiovisual media services except news, current affairs, consumer affairs and religious programmes and programmes with a significant children's audience.  Unfortunately however, the Proposal does not provide any guidance about what constitutes a 'significant children's audience' so there is new uncertainty about what may be captured here.  Previously, the Directive generally prohibited product placement except in cinematographic works, films and series, sports and light entertainment.  Providers are also no longer restricted from giving undue prominence to the product in question, which the Commission recognises has proven difficult to apply in practice.  The sponsorship rules have also been relaxed to remove the prohibition on special promotional references to the sponsor's goods or services.

    The changes recognise the risk of declining advertising revenues affecting investment in original content, where viewers can easily switch from traditional broadcasts to ad-free, on-demand and sharing platforms and thereby affect the value of advertising space.  There is much debate about the future of ad spend and audience reach across different types of media and it will be interesting to see the impact the new rules may have on this, particularly how far service providers will go to take advantage of the new rules.  We expect however that commercial considerations, such as not devaluing ad space value by way of oversaturation, may limit the extent of any changes in market practice.
  • More European content by requiring on-demand providers to ensure at least a 20 per cent share of European content in their catalogues, and to give prominence to this content.  The Proposal does not specify how this 20 per cent share is to be measured.  Further, given the Commission's statements as to the difficulties of testing prominence in respect of product placement, it is unfortunate that the Proposal does not clarify how prominence is to be assessed in the context of European works.  Providers will be keen to understand how they are to adapt these new rules to their platforms or whether they need to wait to see whether national law implementations of the Proposal provide objective criteria for determining this.  As it stands, ensuring prominence could be very subjective.

    Regulators will also be empowered to impose content fund levies on services originating outside their Member State, based on the service's revenues in the regulator's Member State.  Low turnover companies, thematic services and small and micro enterprises are exempt from these requirements.

    By contrast, linear broadcasters will continue to be required to dedicate at least half of their viewing time to European works.  There may be concern from those linear broadcasters that these changes, although welcome, do not adequately level the playing field between traditional and new media.
  • Better viewer protection by expanding to all services covered by the Proposal the prohibition of hate speech and the restriction of content that may be harmful, with the most harmful content on linear and on-demand services to be subject to strict measures including PIN codes and encryption.  The existing broadcaster-specific rules protecting minors against pornography and gratuitous violence have however been removed.  Video-sharing platforms are included within the scope of the Proposal only in respect of the proposed viewer protection measures, although it is plausible the Directive could be further expanded to apply other aspects to such platforms in future.  However, social media services are not included unless, among other requirements set out in the Proposal, the principal purpose of the service or a dissociable section is devoted to providing programmes and user-generated videos to the general public.

    As with the change to what constitutes a 'programme', there  is likely to be debate about whether particular platforms are in or out of these new rules, particularly given the increasing convergence between video-sharing and social media platforms and market consolidation across these areas.  The Commission is also working with major industry players on a code of conduct on combating hate speech online, to be released in the coming weeks.
  • Clarification of the country of origin principle by applying some minor changes to the rules for determining the sole location for regulatory responsibility under the country of origin framework and extending the principle to video-sharing services.  In respect of the regulatory location of a media service provider that has its head office and editorial decisions located in different Member States and a significant part of its relevant workforce in each, the rules have changed slightly to now deem this to be in the Member State where the majority of the workforce involved in the pursuit of the audiovisual media service activity operates rather than the location of its head office.  In an environment where companies operate on a multi-territory basis, there may be uncertainty about where particular workers are located for these purposes.  Furthermore, the relevant workforce may not simply be split between two locations, so it is unclear how the term majority should be interpreted – will a small proportion be sufficient provided it is more than the others?  For video-sharing services not established in a Member State, any group company of a video sharing service provider being located within the EU will be enough to bring that service within the scope of the new Directive, a change clearly designed to spread the reach as far as possible.  Where video-sharing platform providers have several subsidiaries located in different Member States, the provider can designate in which of those Member States to be regulated.  We expect this could incentivise forum shopping by such providers, or otherwise encourage offshoring to bring providers outside the scope of the Proposal altogether.

    Broadcasters and on-demand services (subject to more stringent regulation than video-sharing services) will continue to be regulated according to where their head office and editorial control, or in certain circumstances workforce, are located.  However, there will be an enhanced role for the newly created European Regulators Group for Audiovisual Media Services (ERGA) to advise and assist the Commission in respect of audiovisual media services and to provide for the exchange of experience and good practice as to the regulatory framework.  ERGA will also be tasked with providing an opinion to the Commission in respect of disagreements between Member States as to the proper jurisdiction for regulatory responsibility.
  • Greater independence of audiovisual regulators by enshrining into EU law requirements that they be legally and functionally independent from industry and government, and operate transparently and accountably.

Overall assessment

With regards to concerns as to the gap between regulation of linear and on-demand, traditional TV broadcasters will likely be pleased with the prospect of more flexible advertising rules, potentially giving more freedom over scheduling of ads in prime time.

Given that Member States will remain free to apply higher levels of regulation to these advertising rules, it does remain to be seen whether the new Directive will change the approach of particular jurisdictions such as the United Kingdom, which currently provide for less extensive ad space.

On the other hand, on-demand will continue to be subject to lighter touch regulation, while video-sharing is newly regulated by the Directive but only in respect of viewer protection measures.

Next steps

Once adopted by the European Commission, the Proposal is to be sent to the European Parliament and to the Council in order for it to be commonly agreed between them.  Watch this space for further updates to the Proposal and other initiatives arising out of the Commission's Digital Single Market Strategy.

Footnotes

1 There is no change however to the recital in the existing Directive that it is a characteristic of on-demand audiovisual media services that they are 'television-like', i.e. that they are competing for the same audience as television broadcasts, and the nature and the means of access to the service would lead the user reasonably to expect regulatory protection within the scope of the Directive.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
27 Mar 2017, Seminar, Frankfurt, Germany

The seminar will focus on bilateral collateralization, ETD-Clearing, IT- requirements, clearing obligation as well as EMIR 2.0.

31 Mar 2017, Seminar, Munich, Germany

The seminar will take place on 31 March 2017. It aims to provide German companies with an overview of the latest developments in relation to insurance coverage, banking transactions and legal aspects of doing business with Iran.

25 Apr 2017, Seminar, Milton Keynes, UK

The employment landscape is one that is constantly shifting. Employers who fail to keep up with the changes do so at their peril.

We are pleased to invite you to this seminar, designed to help in-house counsel and HR practitioners get to grips with key recent and forthcoming developments in employment, pensions and immigration law and practice and what they mean for your workforce.

 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.